UPDATE 1-Delta sues US Export-Import Bank over aircraft subsidies

* Battle over subsidies to non-US airlines dates to 2011

* Subsidies also benefit Boeing, largest US exporter

By David Ingram

WASHINGTON, Feb 13 Delta Air Lines Inc
sued the Export-Import Bank of the United States on Wednesday,
renewing a legal fight over subsidies that benefit aircraft
exporters such as Boeing Co and by extension non-U.S.
airlines.

The suit was filed in U.S. District Court in Washington,
D.C. Joining Delta as plaintiffs were Hawaiian Airlines Inc and
the Air Line Pilots Association, International.

The suit alleges that new Eximbank procedures for conducting
economic analysis are illegal. It asks a judge to block them
before they take effect in April.

Delta is the second-largest U.S. airline by operating
revenue, while Boeing is the largest U.S. exporter.

Their subsidies dispute gave the U.S. Congress pause last
year as it considered whether to renew the Eximbank charter,
nearly leading to the shutdown of the bank.

Eximbank issues loan guarantees to non-U.S. customers of
American aircraft-makers such as Boeing, but before it does so
the bank must by law take into account whether the subsidies
would harm other domestic companies.

Delta sued in November 2011, saying Eximbank's subsidy was
arbitrary in a deal between Boeing and Air India. A judge ruled
for the bank, and the case continues on appeal.

Meanwhile, Delta said it found new reason to sue under the
law Congress eventually passed renewing the bank's charter. The
law requires the bank to "develop and make publicly available
methodological guidelines" for use in economic analyses.

Under newly published guidelines, at least 85 percent of
aircraft-related transactions will be exempt from substantive
analysis, the new suit alleges.

"The sheer number of aircraft transactions excluded by these
screens is contrary to the bank's statutory mandates," it says.

An Eximbank spokesman had no immediate comment.

In court papers filed in December about the Air India deal,
lawyers for the U.S. government defended the screening process
the bank has for conducting a detailed analysis in only a
fraction of transactions.

"The Export-Import Bank's financing determinations are
complex, expertise-based policy judgments that are due
heightened deference," the government lawyers said.

A message left with Boeing on Wednesday was not immediately
returned.

The case is Delta Air Lines Inc, et al, v. Export-Import
Bank of the United States, et al, U.S. District Court for the
District of Columbia, No. 1:13-cv-192.

Dec 9 American Airlines Group Inc said
higher average fares per mile have boosted its revenue and
profit expectations for the fourth quarter, a day after rival
United Continental Holdings Inc also raised forecasts.

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